The Business of Fashion [ZARA] Sarah Plumtree

The Business of Fashion: Fashion Evolution

|ZARA|

Sarah Plumtree A8037944

Sarah Plumtree

Z

“

ara is at the fore-front of fast fashion;It has the highest sales densities of all of the brands that are part of the Inditex group and Zara continues to be at the top of the fashion game in a highly competitive sector (Mintel, 2015).

“

The Business of Fashion

Executive Summary Introduction The Brand Brand Identity Brand Consumers

11 13

1 3 5 7 9

Brand positioning Communications Mix

17 19

Appendices Bibliography

ENTS Sarah Plumtree

CONTThe Business of Fashion

Executive Summary This report provides an analysis This lack of mass-communications and evaluative account of the brand could potentially hinder the brand Zara. It examines how Zara operate from gaining even more success; it within the fashion market place and is increasingly important to reach the evolution of Zara as a brand. Reout to consumers via the Internet search indicates “Zara are able to re- (Burns et al, 2011). that Zara is the current leader act to the ever evolv- Nevertheless, the outin the market ing fashion trends and advantages weigh the disadvanfor ‘fast fashion’ meet customer demand tages of the brands (getting fashion merchandise to in a way that is consid- business strategy. consumers fast- erably faster than any Due to being verer than their of it’s competitors (Tun- tically integrated, competitors) Zara are able to regate, 2005).”

(Burns et al, act to the ever evolv2011, p.478).However, limitations of ing fashion trends and meet custhe brands marketing strategy can tomer demand in a way that is clearly be seen in the sense that considerably faster than any of only 0.3% of the brands revenue it’s competitors (Tungate, 2005). is spent on traditional advertising (Kaufmann, 2015).

1. Sarah Plumtree

The Business of Fashion

Introduction T

his report will be examining the scope and variety of work that is undertaken in all areas within the business of fashion by the brand Zara. A variety of methodological techniques were used to collate information for research purposes. These include primary and secondary research.

z

3. Sarah Plumtree

Primary research included going to the Sheffield Meadowhall Zara store and conducting market research on the brands consumers and taking note of the store layout and store packaging through observation. Secondary research entailed the exploration of numerous different academic texts from books, online sources and journals.

I

t is said that the founder of Zara- Spanish born- Amancio Ortega was walking with his fiancé, when he saw a beautiful silk nightshirt that was a ridiculously expensive price. Ortega, then working at a local shirt maker, designed a variation of the high-priced number (Tungate, 2004, p.51). His fiancé loved it and so Amancio Ortega began his own business designing beautiful yet affordable nightwear. He later moved onto general high-street fashion and opened the first branch of Zara in central Spain in 1975 (Tungate, 2004, p.51).

The store was originally going to be named ‘Zorba’ after Ortega’s favourite film Zorba the Greek, however he couldn’t obtain permission to use the name (Tungate, 2004, p.51).Zara grew at a steady rate, but did not expand outside of Spain until 1989, where it launched in Oporto, Portugal. Paris and New York soon followed suit with the London Zara store eventually opening in 1998 (Tungate, 2004, p.51). Today the Inditex group - one of the worlds largest fashion retailers- embrace Zara. .

The Business of Fashion

Zara provide over 70 per cent of Inditex’s income- along with 7 other brands: Massimo Dutti; Bershka; Stradivarius; Oysho; Uterque; Pull&Bear and finally Zara Home which opened in 2003 as a separate chain (Inditex.com, 20015).

Zara Home, aims to do for interiors what Zara has done for fashion. The Inditex group has over 6,700 stores (over 2000 of these are Zara stores) with 120,000 employees throughout the world and an annual turnover of an estimated 17 billion Euros, of which nearly 2.5 billion is Net Profit (Inditex.com, 2015 [online]).

As of 2007, Zara stores offer products such as: menswear and ladies wear, both of these are divided into subdivisions; lower garment, upper garment, shoes, cosmetics and complements (Zara. com, 2015 [online]). Zara also offer a range of children’s clothing known as ‘Zara Kids.’ (Zara.com, 2015 [online]).

Currently, Zara sizes only offer up to a UK size 14 (Zara.com, 2015 [online]).

Brand Identity 5. Sarah Plumtree

A

n identity of a brand is defined by

remaining as close as possible to luxu-

how you are perceived by your consum-

ry brands, nevertheless maintaining its

ers; companies strive to build a strong

mid-range affordable prices.

identity by means of their products,

Zara is renowned for whisking budget

branding and employees (Bickle, 2010,

interpretations of catwalk styles into

p.232). Ultimately, a successful brand

it’s stores at an incredibly fast pace

identity will result in customer loyalty,

and although shopping at Zara is

increased sales and word-of-mouth pro-

purse-friendly, it does not feel like you

motion (Bickle, 2010, p.232). Rabolt (2004)

are shopping at a budget store. The

suggests that ‘Zara cater to a consumer

stores are usually quite large, spacious

segment that business analysts have la-

and swish. The clothes are all given

belled mass class: the hundreds of mil-

space to breathe and the layout is

lions of global consumers who now enjoy

contemporary and clean. This is part

a level of purchasing that’s sufficient to

of the attraction and appeal with the

let them afford high-quality products…’

consumers of Zara. Zara’s total orien-

(p.250). This is exactly the type of message

tation to its consumers is the origin to

Zara want to convey to their consumers,

the brands amazing development and continuing success (Kaufmann, 2015).

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T

he typical Zara customer described by

the brand is someone who is up to date with all of the latest developments in the fashion industry, whom seek on-trend, unique yet affordable outfits (Kaufmann et al, 2015). According to research conducted in July 2015, 38% of Zara customers are in the age group 25-34 years old (Mintel, 2015 [online]) (see appendix 1). Another survey suggested that 44% of Zara’s customers were in the AB Socio-economic group (Mintel, 2015 [online]) (see appendix 2). The AB socio-economic group is the highest on the socio-economic scale and is supposed to consist of people who have occupations that are generally at a higher or intermediate managerial level (Mintel, 2015 [online]).

7. Sarah Plumtree

“

44% of Zara’s customers are in the AB Socio-economic group (Mintel, 2015 [online])

“

A

lthough the products are mass consumed,

Zara till offers its consumers some degree of panache and style (Rabolt, 2004, p.250), which is exactly the message that Zara want to send to its customers. Through primary research carried out at the Zara store in Meadowhall Sheffield, the information collated showed that the typical customer profile for this particular store were mainly women aged between 20-40, mostly carrying a designer or on-trend handbag and highly-conscious of the latest fashion collections.

Brand Consumers The Business of Fashion

Brand Positioning Z

ara is at the fore-front of fast fashion; keeping

up to date with trends by changing stock in store twice a week. It has the highest sales densities of all of the brands that are part of the Inditex group and Zara continues to be at the top of the fashion game in a highly competitive sector (Mintel, 2015 [online]).

Zara continues to generate the majority of net profit and sales for the Inditex group (see appendix 1).

Zara is the fastest in design and manufacture amongst all of its competitors. It typically takes 9 months for a retailer to design and manufacture a concept, however it takes Zara potentially only 2-3 weeks for a design idea to be then displayed in store (Kotler et al, 2004). When considering the time from creation to delivery, in 2013 Zara were eight times faster than rivals Gap and three times faster than H&M, who are second best in the apparel industry (Kaufmann, 2015) This USP gives Zara the edge over competitors as their consumers are offered fresher, more unique products. Each order for Zara contains their latest products as well as products requested by store managers. The store managers are a vital part of the company’s strategy as they monitor the needs and demands of their consumers and therefore tailoring the stock accordingly (Tungate, 2005). This is why different Zara stores in different cities rarely carry exactly the same stock because the clothes reflect the profile of the customers.

9. Sarah Plumtree

F

urthermore, Zara’s product managers constantly keep in touch with stores, receiving feedback from customers and taking note of what products are popular or unpopular. In addition to this, the tills at Zara are computer linked to head office, thus providing a continuous flow of sales information and data (Tungate, 2005). Zara are then able to identify within a day or so if a product is going to be successful or not- a fantastic USP for keeping consumers engaged and catering for their demand.

Zara is able to achieve this USP because it is vertically integrated and has a deep interaction with its suppliers which are mostly all local (Kaufmann, 2015). Vertical integration is a business strategy where the company itself control most stages of the production, design, marketing and logistics of products (Burns et al, 2011, p.24). In addition to this, Zara use the most up to date technologies for fast, effective manufacturing and finally world-class logistics are in place to ensure the swiftest possible delivery of products to store (Kaufmann, 2015).

The Business of Fashion

Advertising D

illon (2012) states that ‘Fashion communication is

the way in which products are advertised and promoted, innovation and originality are fundamental to the success of fashion communication…’ (p.80).

However, Zara communicates it’s fashion to consumers slightly differently than that of their competitors. Zara prides itself on having spent hardly anything on conventional advertising through the brands history. Zara imply that the reason for not spending money on advertising is that it doesn’t bring any added value to the customer (Tungate, 2004, p.50).

Zara prefer to invest money into design, rapid turn-around of stock and the store experience.

This is why Zara stores are often in savvy locations and put attention to detail on their layouts, window displays and facades. The store is their way of communicating to the consumer and relies heavily on the shop window and fronts to manage and influence its customers (Tungate, 2004, p.50).

Zara’s marketing strategy is based on the iconic virtuously located store with a beautifully designed shop window, is very effective for enticing consumers into store. (Kaufmann, 2015).

The shop window display is a vital role in communicating to its customers and is changed regularly and in synch with new arrivals and trends. On average, the store manager changes the mannequins displayed in the window every 2-3 days. This gives passing consumers the impression that something has changed in store and may lure them into entering the store (Kaufmann, 2015).

11. Sarah Plumtree

Communications Mix

H

owever, by using little to no traditional advertising, could Zara be potentially missing out on an even greater success?

Zara prefer to invest mon-

“

ey into design, rapid turn-

Zara do not spend thousands and thousands of pounds on market research to decipher what

around of stock and the store their experience.”

customer

needs

and wants. Instead, they rely exclusively upon it’s

employees who have expertise in finding out what personal factors a Zara consumer is looking for (Kaufmann, 2015).

The process starts at the store with a range of quantitive and qualitative method’s. Firstly, managers consult a PDA (Personal Digital Assistant), which is digitally linked to the POS (Point Of Sale) and shows products ranked in order of sales.

The shop window dis-

“

play is a vital role in communicating to its customers.”

The PDAs are also used as tools to input customer feedback on products as staff regularly speak with customers to gather information such as what products

they

would

look to see more of (Kaufmann, 2015). In addition to this, when the store is closed, staff can also analyze customer feedback by way of what piles of stock have been tried on but not bought. Managers can therefore use the PDA to send the main hub statistics from the till combined with actual insights from the customer on what they would like to see in store (Kotler, 2004). Analysts will then dissect the information provided and look for reoccurring patterns and trends in consumer behavior (Kaufmann, 2015).

The Business of Fashion

13.Sarah Plumtree

Sales promotion and Direct Marketing

C

ustomer loyalty is sought after by Zara through offering to cater for the customers needs as swiftly as possible. More than 80% of the company’s training budget is spent on in store personnel with a huge emphasis on customer service during staff training days (Kaufmann, 2015). Furthermore, customers can build rapport via other communication channels that are not in store; a dedicated customer service team can be reached for any customer query by means of email, telephone and post. This service is available in several different languages to makes things easier for the customer (Kaufmann, 2015). In addition to this, Zara’s customer service was fortified in 2010 when the brands online website was launched. The internet has had a tremendous impact on the ways in which collections are advertised and promoted (Dillon, 2012, p.16) Zara is well established on the internet therefore easily enabling consumers to browse and buy online; as a result Zara’s designs are communicated to a vast amount of consumers through the digital medium (Dillon, 2012, p.16). Another focal point developed via the internet is the usage of social media platforms and blogs. Zara have pages on social media websites such as Facebook, Twitter, Instagram and Pinterest. In doing so, Zara can communicate to consumers through advertising, sharing product information, providing promotional incentives and discounts, thus providing opportunities for consumers to interact with one another and with Zara customer representatives (Burns et al, 2011,p.314). Zara have also extended their online existence further by introducing applications or ‘apps’ for mobile phones and tablets to promote products through entertainment (Burns et al, 2011,p.314).

The Business of Fashion

Social Media Zaras Pinterest page.

15. Sarah Plumtree

Z

“ ara have pages on social media websites such as Facebook, Pinterest, Instagram and Twitter�

Zaras Twitter page.

The Business of Fashion

17. Sarah Plumtree

July 2015 Base: 2,000 internet users aged 16+

Appendix 2. Customer profile, by socio-economic group,

Base: 2,000 internet users aged 16+ Source: Lightspeed GMI/Mintel

Apeendix 1.Customer profile, by age, July 2015

Appendix

The Business of Fashion

Bibliography • Bickle, M. C. (2010) Fashion marketing: Theory, principles and practice. 1st edn. New York: Fairchild Books.

• Campaign AW15 Woman Editorials Zara (2015) Available at: http://www.zara.com/uk/en/editorials/ campaign-aw15-%7C-woman-c270501.html (Accessed: 20 November 2015).

• Cartner-Morley, J. (2014) How Zara took over the high street. Available at: http://www.theguardian. com/fashion/2013/feb/16/how-zara-took-over-high-street (Accessed: November 2015).

•

Dillon, S (2012) The Fundamentals of Fashion Management. Lausanne: AVA Publishing SA.

•

Drew, L. (1992) The Business of Fashion. New York, N.Y., USA: Cambridge University Press.

•

Easey, M. (2002) Fashion Marketing. 2nd edition. Oxford, England: Blackwell Publishers.

• Evening Woman and Man Editorials Zara United Kingdom (2015) Available at: http://www.zara.com/ uk/en/editorials/evening-%7C-woman---man-c775001.html (Accessed: 20 November 2015).

• Fashion.vogue.com.au (2013) Looking into windows. Available at: https://uk.pinterest.com/ pin/321514860868831951/ (Accessed: 4 November 2015).

• Harbott, A (2011) Entrepreneurship & Investing. Available at: http://www.harbott.com/2011/03/03/ analysing-zaras-business-model/ (Accessed: November 2015).

• Kaufmann, H.R. (2014) Handbook of research on managing and influencing consumer behavior.

United States: Business Science Reference.

19. Sarah Plumtree

• Kotler, P. and Armstrong, G. (2004) Principles of marketing. 6th edition. London: Prentice-Hall,International.

• Lickr.com (2014) BBC 3 work shop. Available at: https://uk.pinterest.com/pin/482096335085203714/ (Accessed: 4 November 2015).

• Login to Mintel reports - Mintel group Ltd (no date) Available at: http://academic.mintel.com/display/752291/ (Accessed November 2015).

• N.K (2015)) ‘What is positioning? Definition and meaning’, Available at: http://www.businessdictionary.com/definition/positioning.html (Accessed: 20 November 2015).

•

Tungate, M. (2005) Fashion brands Branding style from Armani to Zara. LONDON: Kogan Page.

• Watson, L. (2003) ‘Vogue’‘ fashion: 100 years of style by decade and designer’. London: Carlton Books.

Zara (zaraofficial) (no date) Available at: https://uk.pinterest.com/zaraofficial/ (Accessed: 20 November 2015).

• Zara autumn/Winter Sale. (2013) Available at: https://uk.pinterest.com/pin/333266441147289108/ (Accessed: 4 November 2015).

• Zara autumn/Winter Sale. (2013) Available at: https://uk.pinterest.com/pin/333266441147289108/ (Accessed: 4 November 2015).

• Zara customer profile (2015) Available at: https://in.pinterest.com/pin/444941638161102009/ (Accessed: 20 November 2015). In-line Citation: (Zara customer profile, 2015) • Zara United Kingdom - Official Website (no date) Available at: http://www.zara.com/uk/ (Accessed: November 2015).

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